Champagne’s direct correlation to economic dynamics has historically proven to be a double-edged sword.

The category mirrors the state of economies while, at the same time, its narrow focus on Western markets increases downside risks in the case of a crisis. As dark clouds of fresh financial turmoil are gathering, will Champagne’s sparkle shield the category from a perfect storm of extreme discounting, the cannibalising advance of other sparkling wine and Western Europe’s conservative traditionalism?

Champagne mirrors socio-economic developments in key Western markets, but it now has to face the additional headwinds of a frugality-induced “new normal” favouring of other sparkling wines, on the back of their casual character and enticing price/quality ratio. Ignoring the issue, or failing to acknowledge Processo and Cava’s disruptive effect, will only exacerbate the problem down the line.

Meanwhile, extreme discounting and the cannibalising effect of the advancing 'other sparkling wine' category will continue undercutting Champagne’s positioning and value sales, while putting on pressure as long as financial volatility prevails.

On the other hand, stubbornly high unemployment rates, flat-lining or negative GDP growth and the European debt saga will continue to be bumps in the road for the category in the short to medium term.

The category is relatively consolidated when compared to overall wine, but highly fragmented in relation to beer. Nevertheless, smaller producers may get a respite from cost pressures on the back of increased interest in 'grower Champagne'.

Overcoming the inherent conservatism that is hampering attempts to innovate is the only way the category will significantly raise penetration rates and expand audiences beyond its core demographic.

Major downside risks continue to haunt the category’s future. Green initiatives, grower Champagne, a shift in regional focus, library releases and innovation initiatives will make the real difference moving forward.

Breaking the mould will be the key for a sparkling future.

Euromonitor International’s latest Global Report attempts to shed light on these questions while highlighting effervescent opportunities for the short and medium term.